A Review of Research on Factors Influencing Implementation Success of Activity Based Costing

Abstract

Inspite of ABC's superior over traditional costing methods, its spread has remained rather slow and it has not been as widely adopted as was expected. As a result many researchers have used empirical studies in an attempt to examine how ABC could best be implemented and to find answers to the key question: why ABC implementation is successful in certain firms and not in others? Many studies provide evidence that the reason for different degrees of ABC success is the different contextual factors faced by each firm. The objective of this paper is to review the academic researches on ABC that have examined pertinent issues related to successful implementation of ABC. Through the review it seeks to identify the most important factors that are influencing success of ABC implementation, and from the review research gaps in this field will be identified. The review reveals that a majority of research emphasizes on the association between ABC success and behavioural and organizational factors such as top management support, involvement and training. Furthermore, the different factors affecting the various stages of the implementation and the degree of importance of each factor varies according to the stage of the implementation. There are very few empirical studies that have been done to examine the roles of organizational culture/structure on ABC implementation success. Moreover, in contrast to the western countries there is a dearth of studies that examines success and success factors of the implementation of ABC in the Asian context.

Keywords: Activity Based Costing, ABC Success Determinants, Behavioural and Organizational Factors

JEL Classification: M41